Attorneys for the Public Hospital Authority (PHA) have questioned whether the role of the management of a debt financing process of the PHA constituted an abuse of power and misconduct that would warrant disciplinary action.
The firm McKinney, Turner and Co. said that the board was misrepresented in negotiations surrounding the handling of a $55 million bond for the construction of the Critical Care block at the Princess Margaret Hospital (PMH).
According to documents obtained by the Bahama Journal, the board claims that it had no notification of the request for consideration and approvals of the debt financing process for the block.
The board claims that it only became aware of this major undertaking by PHA from reports from the media.
Two weeks ago, PHA Managing Director Herbert Brown was placed on administrative leave for reasons he claims were unbeknown to him.
He has since been reinstated by an order handed down by Supreme Court Justice Jon Isaacs.
According to legal documents from McKinney, Turner & Co. a copy of the Board Resolution to borrow $55 million as a bridging facility from RBC has been requested by the board.
However, sources say they have not seen any of the following resolutions: An enabling resolution of the board that gave management the authority to conduct and conclude negotiations of the terms of the bond issue; a resolution confirming the board has reviewed and approved the Private Placement Memorandum settled by Royal Fidelity for the bond issue; an enabling resolution delegating the right to management or any other individual to sign the Private Placement Memorandum on behalf of the PHA.
In the legal document, the PHA board also claims the copy of the Private Placement Memorandum provided to them was not signed.
Sources say the Securities Commission, according to the Securities Industry Act 2011, is now entitled to investigate, and if appropriate, prosecute the PHA for the alleged non-compliance with mandatory provisions governing the necessity for accurate disclosure of offerings.
The document also states that the board, if satisfied, that no material misrepresentation was made in the Offering Memorandum of the PHA on behalf of the board, is empowered to ratify the process.
In the legal document, the PHA board also claims the copy of the Private Placement Memorandum provided to them was not signed.
Sources say the Securities Commission, according to the Securities Industry Act 2011, is now entitled to investigate, and if appropriate, prosecute the PHA for the alleged non-compliance with mandatory provisions governing the necessity for accurate disclosure of offerings.
The document also states that the board, if satisfied that no material misrepresentation was made in the Offering Memorandum of the PHA on the behalf of the PHA board, is empowered to ratify the process as unfolded by subsequent resolution and preserve the bond issue.
It concluded by saying the “immediately foregoing issue is a matter for the board, with the input from the minister of health, whether the role of management in the debt financing process constituted an abuse of power and misconduct that would warrant disciplinary action.”
